2015/07/20/(Mon)

Prologis Completes $5.9 Billion KTR Acquisition [Real Estate]

Prologis, Inc. announced it has completed its acquisition of the real estate assets and operating platform of KTR Capital Partners (KTR) and its affiliates for a total purchase price of $5.9 billion, on June 1, 2015.

The properties were acquired by Prologis U.S. Logistics Venture (USLV), a 55-45 consolidated joint venture with Norges Bank Investment Management (NBIM), manager of the Norwegian Government Pension Fund Global. The real estate assets include an approximately 60 million square foot operating portfolio, 3.6 million square feet of development-in-progress and a land bank with a build-out potential of 6.7 million square feet.

"We're interested in acquiring assets in the U.S. only when we see a close alignment with our own holdings," said Hamid Moghadam, chairman and CEO, Prologis. "We bring a significant competitive advantage to the table with the attractiveness of our currency through our OP unit structure, and our ability to execute reliably and expeditiously gives us an important edge."

Moghadam added, "The transaction is immediately accretive and will also deliver long-term value to our shareholders through incremental NOI from the lease-up of the operating and development portfolios."

Prologis' share of the completed acquisition was valued at approximately $3.2 billion, consisting of the assumption of approximately $400 million in secured mortgage debt, the issuance of $202 million in common limited partnership units in Prologis, L.P. and $2.6 billion in cash. The cash portion was funded through the company's previously announced financing transactions, with the remainder from its global line of credit and the monetization of hedges.

Prologis expects to repay its two-year term loan and line of credit through the combination of asset and joint venture sales. The two-year term loan replaced the commitments to fund the previously announced bridge loan.

The transaction is expected to be accretive to 2015 core funds from operations (Core FFO) by approximately $0.09 per share. As a result, Prologis increased its full-year 2015 Core FFO guidance range to $2.16 to $2.22 per diluted share from $2.07 to $2.13 per diluted share. This represents year-over-year growth of more than 16 percent at the midpoint. On an annual stabilized basis, the forecasted Core FFO accretion is expected to be approximately $0.15 per share. Additionally, the transaction is expected to reduce general and administrative expenses as a percentage of assets under management by approximately 10 percent and increase U.S. dollar equity exposure to 95 percent.

"We have worked extremely hard to position our balance sheet for opportunities such as this," said Tom Olinger, chief financial officer, Prologis. "Looking forward, we can fund our future deployment activity through capital recycling. We believe this ability to self-fund, in combination with the organic earnings growth from same-store NOI and development stabilizations, will reduce debt-to-EBITDA by roughly half of a turn on an annual basis."

- See more at: http://otp.investis.com/clients/us/prologis/usn/usnews-story.aspx?cid=848&newsid=29533#sthash.fBsivR3J.dpuf